Recent on-chain data indicates that investors concentrating on short-term gains in Bitcoin (BTC) and being highly responsive to swift market fluctuations are presently encountering substantial losses due to a steep price drop. These investors are particularly sensitive to rapid shifts in the market.
Bitcoin, the most widely used cryptocurrency, experienced a significant decrease of more than 10% in value over the past week, bringing its total price to a new all-time low of $25,600. Since the FTX crisis in November, this is the week in which the performance of the cryptocurrency was the most unfavorable weekly performance.
According to a report by data tracking company Glassnode, short-term investors (entities that have held coins for less than 155 days) are currently experiencing unrealized losses, which puts these investors in a precarious situation.Short-term investors are entities that have held coins for less than 155 days.
This category accounts for approximately 2.26 million BTC of the 2.56 million BTC that are held by short-term investors. After significant market peaks, such as those seen in May 2021 and December 2021, these losses have become particularly pronounced.
In direct response to this trend, more coins held for short durations are being transferred to exchanges, signifying a rise in loss dominance. This movement frequently comes before the execution of a liquidation or the use of assets as margin in the trading of derivatives. The weekly report published by Glassnode emphasizes the substantial loss dominance figure, drawing attention to the fact that short-term holders are at risk of incurring losses and are extremely vulnerable to price fluctuations.
In addition, the excitement regarding the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the United States has diminished as a result of delays. These delays are partly attributable to rising bond yields as well as tightening liquidity conditions.